Congress targeting outlaw spammers

But firms still could send unsolicited ads under top bills

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Sen. Charles Schumer's plan for a "do not e-mail" list similar to the "do not call" list aimed at telemarketers is not likely to be included in the spam legislation that Congress is expected to pass this fall.

Aug. 12, 2003 — Internet users say they’re choking to death on spam, but they may not get much breathing room from legislation expected to be adopted by Congress this fall. In a test of how well commerce and communication can coexist, the lawmakers appear determined to pass a bill that will target the “bad actors” of the junk e-mail world but do little to reduce unsolicited pitches from direct marketers and other businesses.

Given the rising level of public frustration over spam, both supporters and opponents of various bills working their way through Congress say they expect lawmakers to pass spam legislation this fall, after nearly four years of unsuccessfully grappling with the issue.

But with eight separate bills on the table, the exact formula by which the lawmakers will attempt to address what is by all accounts a highly complex problem remains very much in flux.

The leading bills at this point — known as the CAN Spam Act in the Senate and the RID Spam Act in the House — are expected to undergo changes in the coming weeks as provisions of competing legislation are incorporated to broaden support. But sources familiar with the negotiations say that some aspects of the final product are becoming clear.

Both bills would prohibit the sending of e-mail that attempts to disguise its source or contains deceptive subject lines and would require advertisers to include both an “opt out” mechanism and accurate contact information.

They also would impose some new criminal and civil penalties on spammers who violate the law and allow Internet service providers — but not consumers — to sue those who don’t abide by the rules.

‘Do not e-mail' list in trouble
Apparently out of favor is an approach advocated by Sens. Charles Schumer, D-N.Y., and Mark Dayton, D-Minn.: creation of a “do not e-mail” list similar to the “do not call” registry recently put in place by the Federal Trade Commission to enable phone customers to opt-out of telemarketing calls.

Opposition from marketers and concerns voiced by the FTC and others that the list would fall into the hands of unscrupulous e-mail marketers apparently have doomed the concept, although Schumer is expected to make a final attempt to add it to the Senate’s spam legislation.

The proposals for a “do not spam” list were the closest lawmakers came to the “opt-in” method favored by most anti-spam groups, which would require advertisers to get permission from consumers before sending them their advertisements.

This is the approach adopted in July by the European Union, which instructed its 15 member states to adopt legislation banning the sending of spam without prior consent by Oct. 31. Numerous European lawmakers have expressed concern that the passage of legislation in the United States based on an “opt-out” model will render the European laws moot, since most of the spam that reaches Europe originates in the United States.

A federal spam law also would erase tougher anti-spam laws on the books in several of the 35 states that have enacted spam legislation since Nevada became the first state to take the plunge in July 1997, a key issue for commercial e-mailers.

“With e-mail crossing state borders so readily and with organizations often unsure where the recipient resides, pre-emption of state laws becomes absolutely necessary,” said Al DiGuido, CEO of Bigfoot Interactive, which does “permission-based” e-mailing for 150 companies. “Without pre-emption, there simply is no easy way to uphold, react to or manage the proliferation of state-imposed legislation.”

But because the federal legislation apparently will be based on the “opt-out” model, which would require consumers to ask advertisers individually to remove them from their e-mail lists, anti-spam groups argue that it will actually increase the spam volume by sending businesses that have previously stayed on the sidelines stampeding to the Internet.

“There are tens of millions of businesses that would like to advertise directly to consumers,” said Jason Catlett, president of Junkbusters.com, a New Jersey-based organization fighting the proliferation of what it calls “junk advertising.” “If you spent the best part of your working day opting out from your spam, and you did it diligently for six months, you might reduce the amount of spam you get.”

‘Potential 200 million spammers'
David Sorkin, a law professor at the John Marshall School of Law and creator of the spamlaws.com Web site, echoes those fears.

“The big concern I have is not about the 200 bad spammers now but the potential 200 million spammers,” he said.

But supporters of the legislation taking shape on Capitol Hill — including direct marketers and big Internet service providers like AOL and Microsoft, owner of MSN — say that a “significant reduction” in unsolicited commercial e-mail can be achieved by going after the renegade spammers believed to be responsible for the vast majority of spam.

“This bill gives power to consumers to say ‘no more’ and provides a multi-tiered, very aggressive enforcement structure to go after the worst actors,” said Carol Guthrie, a spokeswoman for Sen. Ron Wyden, D-Ore., co-author with Sen. Conrad Burns, R-Mont., of the CAN Spam Act.

Supporters of the legislation acknowledge that a federal law alone won’t solve the spam problem. Also necessary, they say, will be a stepped-up enforcement effort, improved global cooperation and better filtering technology.

But Louis Mastria, a spokesman for the Direct Marketing Association, which represents nearly 500 direct mailers and marketers and has thrown its support behind CAN Spam and the RID Spam bill, by Rep. Richard Burr, R-N.C., said anti-spammers are simply “trying to scare people” with their predictions that the legislation will trigger a deluge of junk e-mail.

“Marketers are going to be very sensitive to volume,” he said. “… Losing a customer (by ignoring his or her wishes) is a horrible thing because it’s nearly impossible to get that customer back.”

In addition to support from direct marketers, sources say the CAN Spam and RID Spam bills have climbed to the top of the legislative pile thanks in part to support from some of the leading e-mail providers, including AOL and Microsoft, which operates MSN, as well as Internet portal Yahoo, all of whom have complained loudly about the financial toll that spam inflicts on their networks. (MSNBC is a joint venture of Microsoft and NBC.)

Law must ‘emphasize the disctinction'
Ira Rubinstein, an associate general counsel for Microsoft, defended the company’s efforts to shape anti-spam laws as necessary to preserve the commercial promise of the Internet.

“From a policy standpoint it is very important to emphasize the distinction between legitimate e-mail and what everyone would agree is a typical case of spam … and (to) propose legislative remedies that reinforce that distinction and restore confidence in the use of e-mail as legitimate communication by legitimate companies,” he said.

He added that Congress can play an important role in reducing spam by cracking down on renegade spammers, but said it should not “burden all online commerce” by imposing onerous regulations and harsh penalties because filtering technology is rapidly returning control to consumers.

Rubinstein said that Microsoft also favors creation of a self-regulated industry group that would offer commercial incentives for e-mailers who adopt and abide by “best practices” rules. The incentives for advertisers to participate in the monitored program would be the right to display a digital seal indicating that the sender is in compliance with the standards and “presumption of compliance,” which would require complaintants to meet a higher standard of evidence to show that a company had violated the rules, he said.

Sources at AOL, who briefed MSNBC.com on the company’s lobbying efforts on condition of anonymity, said the company has not taken positions on specific bills, but has urged Congress to take a two-pronged approach to spam by requiring an “opt-out” mechanism and clear identification of the source of the mail coupled with strong criminal and civil penalties for spammers who resort to fraud, falsification of headers, hacking or other illicit methods to send their e-mail.

Like Microsoft, the company believes such measures will compliment improving filtering technology and put consumers back in control of their inboxes, the sources said.

Yahoo representatives did not return calls seeking comment.

Unintended consequences feared
The ISPs’ position has support in some quarters without a direct stake in the outcome.

Clyde Wayne Crews Jr., director of technology policy at the Cato Institute, a libertarian-minded think tank, said he thinks that federal legislation could have unintended consequences if it isn’t carefully targeted.

“The Internet is already suffering and you have to be careful that you don’t create a situation where the good guys get swept under and become terrified to use the Internet,” Crews said.

But several sources familiar with the Internet companies’ lobbying efforts told MSNBC.com that during discussions with lawmakers and their staff members, the firms’ representatives have appeared to be more focused on protecting a potentially lucrative revenue stream rather than combating spam.

“One of the ironies of all this is that while the industry wants to reduce the amount of spam going through their networks, some of the bigger ISPs are opposing more stringent measures because they use spam to market their products,” said one source, who like the others spoke on condition of anonymity. “They want a measure that directly impacts the rogue spammer, but doesn’t directly address the underlying issue.”

Another source said the companies’ stance reflects a mistaken belief that the public is willing to accept advertisements for their products and services if the offers for body-enhancement products and pleas from Nigerian widows are excised from their inboxes.

“They don’t recognize that their stuff is regarded by many people as spam,” the source said.

The big ISPs have not marched in lockstep on spam legislation.

Earthlink, for example, indicated a willingness to accept an opt-in standard.

“I think from a consumer perspective, ‘opt in’ would be the ideal standard because otherwise every online merchant gets at least one free spam, which would put a burden on consumers,” said Dave Baker, vice president of law and public policy for Earthlink. “But as a practical matter, virtually every piece of legislation adopts an opt-out standard, so that appears to be the reality of what we’re dealing with.”

Delivery requirement opposed
However, Earthlink is in agreement with AOL and Microsoft that the law should not require ISPs to deliver commercial e-mail, even if the senders comply with all the rules.

“There can be no restriction on an ISP’s current ability to block spam on behalf of its customers,” Baker said. “We’re not going to get into a situation where a direct marketer says to an ISP, ‘You have to deliver my messages.’”

While much of the maneuvering by stakeholders in the spam debate has quietly taken place in discussions with legislators and staffers, Microsoft suffered a public black eye this summer when a California lawmaker accused the company of killing what would have been the country’s toughest anti-spam law.

The 5-2 vote by an Assembly committee to kill the bill by state Sen. Debra Bowen, D-Redondo Beach, came on July 1, the same day that Microsoft announced it was suing 15 spammers for allegedly abusing its network. Some observers saw the timing of the announcement as an effort by the company to divert attention from its role in California.

In a statement issued after the vote, Bowen ripped the Redmond, Wash.-based software manufacturer for lobbying against her bill, which was patterned after the federal law banning unsolicited junk faxes.

“Microsoft doesn’t want to ban spam; it wants to decide what’s ‘legitimate’ or ‘acceptable’ unsolicited commercial advertising so it can turn around and license those e-mail messages and charge those advertisers a fee to wheel their spam into your e-mail inbox without your permission,” she said.

Bowen told MSNBC.com that Microsoft was particularly concerned about a passage in the bill that would have allowed consumers to sue advertisers who violated the law for $500 per spam - a penalty that could have been tripled by a judge if it was determined that the advertiser did so “willfully and knowingly.”

“I wanted to make sure we could go after the big spam houses,” she said. “… Microsoft said, ‘We want to make sure we don’t get caught up in the litigation.’”

Rival bill preferred
Rubinstein, the Microsoft spokesman, said only that the company preferred a rival measure by state Sen. Kevin Murray, D-Los Angeles, over Bowen’s bill and made its reasons clear to legislators.

“In many states, we’ve been applauded for our efforts; in others, we’ve been subjected to political disagreements,” he said of Bowen’s comments.

He also said that, while Microsoft recognizes that emotions run high on spam, it doesn’t believe that the positions it has taken on legislation will trigger a public backlash against the company.

“If there is an outpouring of anger, I don’t think it will be because of a stand we have taken on legislation,” Rubinstein said. “It will because the efforts now under way on legislation, enforcement, technology and self-enforcement have failed. … And then it will be deserved.”